Hill, Industry Fill Obama Policy Vacuum

6 Feb 2009

Northrop Grumman roared today, sending out a press release that cuts to the upgraded version of the Hawkeye, "Puts 350 U.S. Jobs at Risk." Yesterday, Rep. Gene Taylor (D-Miss.), chairman of the House Armed Services seapower and expeditionary forces subcommittee, issued an adumbrated Navy shipbuilding budget.

These and other less public moves seem confirmation that, with the Obama administration's eyes so firmly fixed on how to rebuild the economy, Congress and the defense companies are going to be all too happy to push things their way and see if the administration notices in time.

Several lobbyists and consultants have said over the last few weeks that this was exactly what they were advising their companies to do and it looks as if it is becoming a public sport.

"The longer the Pentagon waits to signal its program choices the more other interests are going to step into the breach," said a long-time Pentagon watcher, familiar with the Hill, industry and the building. For the companies, facing tight credit and the prospect of major program cuts, this source said it is their fiduciary responsibility to lobby like hell and do it as publicly as needs be. "The stakes are high and each year they get a little higher as we get fewer programs and those are all more expensive than ever."

Part of the problem is that Gates and his team made the reasonable choice to put off some major program decisions such as the tanker until the new team was in the building. Well, the old team is still in the building -- although a few Obamites should be joining them soon now that the SASC has approved Bill Lynn and the other three new senior Pentagon leaders -- and the Pentagon has not made these decisions and it faces enormous challenges in deciding the future course of the wars in Iraq and Afghanistan. Still, those folks in the Pentagon has scrubbed the numbers several times over the last few years and know these programs as well as any political appointees ever will, something our Pentagon watcher noted. "In some ways I'm not sure what else we need to know in order to make some decisions. How much more TacAir debate do you need to have," he said.

Of course, hanging over all this is the dark cloud of fear afflicting most Americans about the economy's future course. Our Pentagon watcher argues that this is exactly why modernization programs should be funded as fully as possible. "We have never had the number and extent of the bleeding of jobs we have right now," he said. But that is not good reason t cut program for infrastructure work and other non-defense spending. The country must consider the cost of funding uncertainty and the possible loss of highly skilled and often unique jobs on the industrial base. Our Pentagon watcher said that the jobs you lose today help decide what you can build tomorrow.

The folks at Northrop could have been listening to our phone conversation if you look at their press release. "Calling a $200-plus million cut to production procurement for the E-2D Advanced Hawkeye a "high risk" move that will put U.S. jobs and global security at risk, Northrop Grumman Corporation (NYSE:NOC) and its 280-member supplier team is calling on Congressional leaders to restore the funding. The reduction in funding jeopardizes the building of production aircraft initially planned in fiscal years 2009 and 2010," the release said. It added that the program has recently finished a "very successful” operational assessment. "There is a great sense of urgency today to restore production procurement dollars into the E-2D advanced Hawkeye budget-otherwise hundreds of U.S. jobs will be lost and taxpayers will not derive the benefit of economies of scale," said Tom Vice, sector vice president for Northrop Grumman Aerospace Systems sector.